CAMPBELL v. LAGO PETROLEUM CORP.

June 30, 1937

CAMPBELL et al.
v.
LAGO PETROLEUM CORPORATION et al.

The opinion of the court was delivered by: BYERS

BYERS, District Judge.

Motion for a final decree as prayed for in an amended bill of discovery in equity, in aid of an action at law now pending in this court, and that the defendants be ordered to answer the interrogatories annexed to the bill, reserving to the defendants the right to object to specific interrogatories.

The cause has been somewhat discussed in connection with the defendants' motion to dismiss. See Campbell et al. v. Lago Petroleum Corporation (D.C.) 16 F.Supp. 980.

No order was entered upon that decision, but thereafter an amended bill was filed, and to that amended answers have been made by the defendants separately, the legal sufficiency of which now requires determination.

As has been previously stated, the lawsuit is to recover a large sum of money ($13,786,419.63) as compensation to Willet L. Wagner (i.e., his administratrix). and Lewis V. Curry pursuant to an alleged oral contract said to have been made with them by the defendant company, hereinafter called Lago, on or about November 8, 1923, in which the former "agreed that they would use their best efforts to interest persons, firms or corporations in the purchase of crude oil to the extent that such persons, firms or corporations would negotiate with defendant regarding same; such crude oil to be produced from the Venezuelan oil properties owned or to be acquired or controlled by the defendant. And defendant agreed that it would pay to said Willet L. Wagner and plaintiff Curry a commission at the usual and customary rates upon all crude oil sold by it to any person, firm or corporation so interested by said Willet L. Wagner and plaintiff Curry, it being understood that the terms and conditions of sale were to be entirely a matter of negotiation and agreement between defendant and such persons, firms or corporations over which said Willet L. Wagner and plaintiff Curry would have no control and with which they were to have nothing to do." (Complaint at law, part of par. Third.)

The following allegations are of due performance by Wagner and Curry of all terms and conditions by them to be performed; and on information and belief, that defendant sold to a buyer "who became interested in said purchase through the efforts of said Willet L. Wagner and plaintiff Curry pursuant to said contract to the extent that he negotiated with defendant regarding the same, the following amounts of crude oil produced from Venezuelan oil properties owned and controlled by it as follows" (then follow the exact figures in barrels of oil from 1924 to October 1, 1934, inclusive, amounting to many millions of barrels); that the usual and customary rates of commission were five cents per barrel; that Wagner and Curry thereby became entitled to receive the amount sued for, which has not been paid; Wagner's death on April 11, 1934, and the legal capacity of his administratrix.

Except for non-payment, the answer denies the foregoing specifically and pleads separately the six-year Statute of Limitations as a complete, and as a partial defense as to the years 1924 to 1929, inclusive.

The complaint was verified April 18, 1935, and the answer, on May 7, 1935.

The lawsuit has thus been at issue for over two years, and would have been reached for trial in half that time.

The original bill of discovery was filed October 8, 1936, and the motion to dismiss was decided during the following month.

The discovery proceeding is of course ancillary to the action at law, and the latter establishes the pattern of the issues, and their scope, and therefore the subject-matter of the discovery which the plaintiffs may reasonably obtain.

The answers contain denials, which will be disregarded for reasons previously stated, and the several defenses will be discussed, and where there is a difference in the amended answers, that will be stated.

The first separate defense is that of laches. The recitation is that no action at law was brought to recover under the alleged contract, for over eleven years after it was said to have been entered into, during ten of which Wagner was alive; and that the discovery proceeding was not brought until more than twelve years after the date of the alleged contract. It is asserted that the plaintiffs' right to discovery is barred by the unconscionable delay.

This is not one of the pleas referred to in Pressed Steel Car Co. v. Union Pacific R. Co. (D.C.) 241 F. 964, and the reason is thought to be clear. The plea of laches is peculiar to a suit in equity (Godden v. Kimmell, 99 U.S. 201, 25 L. Ed. 431) since Statutes of Limitation do not govern, and if this discovery were sought in aid of a patent cause, as in Fosdick v. Lowell Machine Shop (C.C.) 58 F. 817, the plea could not be deemed insufficient. Since the primary cause is at law, a plea of laches cannot be imported into the issues in that controversy by interposing it to the bill of discovery, the ancillary character of which is well understood.

It is unnecessary to consider whether a plea of laches would lie to the discovery itself under appropriate circumstances, such as the presence of such delay in seeking it that it would be inequitable to entertain the bill. Here the lapse of time between the filing of the original complaint and the bill of discovery was about eighteen months, and no showing is made that during the interval the position of the defendant changed so that the plaintiffs should not be accorded this assistance of a court of equity to meet the burden of proof resting upon them in the primary controversy.

While there is no application in the notice of this motion to strike out this defense upon the ground that it is not legally sufficient, under Equity Rule 33 (28 U.S.C.A. following section 723), enough has been said to indicate that, if that had been done, the motion would ...

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